RETAIL FOOD STORE INVENTORY BEHAVIOR

A stock-adjustment model is applied to monthly retail food store inventory data from 1968 through 1988. Estimates of the speed-of-adjustment coefficient (.34 to .75) are higher than estimates from previous research, indicating that periods of inventory disequilibrium in food retailing are short-lived. The results indicate that inventories are insensitive to financial carrying costs. The hypothesis that parameters of the model are constant over the sample period cannot be rejected, indicating that changes in food retailing (e.g., electronic scanning and diversification of product mixes) have not affected inventory behavior.